CSB Bancorp, Inc. (OTC Pink: CSBB):
Second Quarter Highlights
Quarter Ended
June 30, 2024
Quarter Ended
June 30, 2023
Diluted earnings per share
$
0.61
$
1.36
Net Income
$
1,615,000
$
3,644,000
Return on average common equity
5.89
%
14.62
%
Return on average assets
0.56
%
1.27
%
CSB Bancorp, Inc. (OTC Pink: CSBB) today announced second
quarter 2024 net income of $1,615,000, or $0.61 per basic and
diluted share, as compared to $3,644,000, or $1.36 per basic and
diluted share, for the same period in 2023. For the six-month
period ended June 30, 2024 net income totaled $4,548,000 compared
to $7,578,000 for the same period last year, a decrease of 40%.
Annualized returns on average common equity (“ROE”) and average
assets (“ROA”) for the quarter were 5.89% and 0.56%, respectively,
compared with 14.62% and 1.27% for the second quarter of 2023. For
the six-month period ended June 30, 2024 ROE and ROA were 8.35% and
0.79% as compared to 15.49% and 1.33% for the comparable period in
2023.
Eddie Steiner, President and CEO stated, “Net interest margins
remain pressured but have held within 2 basis points of last year’s
first six months performance. Deposit balances are steady, buoyed
partially by savers taking advantage of higher rates. Loan demand
has slowed. Businesses are avoiding nonessential borrowing until
lower rates emerge, and home lending is constrained by housing
inventory and mortgage rates. We expect some deterioration in
credit conditions as borrowers contend with the dual effects of
inflation and high interest rates. Overall quality within our loan
portfolio remains acceptable with the exception of one customer
relationship for which a significant loss reserve has been
established.”
Pre-Provision Net Revenue (“PPNR”) (a non-GAAP measure) totaled
$4.85 million during the quarter, an increase of $174 thousand, or
4%, from the prior year’s second quarter. Net interest income
decreased $69 thousand, or less than 1%, noninterest income
increased $8 thousand, or less than 1%, and noninterest expense
decreased $235 thousand, or 4%, in the second quarter of 2024
compared to the same period in 2023.
Credit loss provision expense for the quarter increased $2.7
million from second quarter 2023 and $3.9 million for the
comparable six-month period. A previously identified commercial
lending relationship totaling $6.4 million experienced credit
deterioration and was placed on nonaccrual during the second
quarter while the company was being offered for sale. On July 23,
the bank was notified that the borrower’s company would cease
operations. The relationship has a specific reserve of $4.1 million
within the combined total allowance for expected credit losses.
The allowance for expected credit losses amounted to $10.6
million, or 1.47% of total loans, on June 30, 2024, as compared to
$6.6 million or 0.99% of total loans on June 30, 2023. The
allowance for credit losses on off-balance sheet commitments on
June 30, 2024 was $477 thousand, as compared to a June 30, 2023
balance of $328 thousand. CSB recorded no allowance for credit
losses related to AFS or HTM debt securities as there is a zero
loss expectation on these securities.
Loan interest income including fees increased $1.5 million, or
17%, during second quarter 2024 as compared to the same quarter in
2023. The increase was mainly due to rate increases as well as a
$57 million increase in average loan volume. Securities interest
income decreased $142 thousand, or 7%, during the second quarter
2024 compared to the same quarter 2023 as the Company continues to
deploy cash flow from investments into loan originations. Loan
yields for second quarter 2024 averaged 5.74%, an increase of 44
basis points from the 2023 second quarter average of 5.30%, while
overnight funds and securities yields for second quarter 2024
averaged 5.57% and 2.20%, respectively, compared to 5.15% and 2.13%
in the second quarter 2023.
Interest expense rose $1.4 million, or 62%, during second
quarter 2024 as compared to second quarter 2023. The increase
follows a period of rapid interest rate increases spurred by the
Federal Reserve during March 2022 through May 2023, followed by
competitive pressures from banks and others to secure adequate
funding. The cost to fund gross earning assets for the second
quarter 2024 was 1.31% as compared to 0.82% for the second quarter
of 2023.
The fully-taxable equivalent (“FTE”) (a non-GAAP measure) net
interest margin was 3.28% compared to 3.33% for the second quarter
2023. Compared to the 2023 second quarter, FTE net interest income
decreased $68 thousand, or less than 1%, reflecting a declining net
interest margin offset by a $12 million, or 1%, increase in average
earning assets. The higher interest rate environment coupled with
the continued mix shift into loans from securities primarily drove
the increase in earnings from assets, which was offset by the
higher cost of funds. Tax equivalency effect on net interest margin
was 0.01% in second quarter 2024 and 2023.
Noninterest income increased $8 thousand, or less than 1%,
compared to second quarter of 2023. The increase was primarily the
result of a $31 thousand increase in trust and brokerage fees, a
$22 thousand increase in earnings on bank owned life insurance, and
a $17 thousand increase in gain on sale of mortgage loans.
Offsetting decreases were recognized in credit card fees, an
unrealized loss on equity securities, and service charges related
to deposit overdraft fees.
Noninterest expense decreased $235 thousand, or 4%, from second
quarter 2023. Salary and employee benefit costs decreased $333
thousand, or 10%, compared to the prior year quarter, primarily
resulting from various decreases in compensation-related benefit
programs. Debit card expenses increased $24 thousand, or 14%,
primarily with increases in processing. FDIC assessment decreased
$49 thousand. Software expense decreased $7 thousand, or 2%.
Financial deposit institutions tax increased $24 thousand, or 13%,
due to the increase in capital. Equipment expense increased $12
thousand, or 6%. The Company’s second quarter efficiency ratio
decreased to 54.2% compared to 56.2% in the prior year.
Federal income tax expense was $348 thousand in the 2024 second
quarter compared to $894 thousand in the 2023 second quarter. The
effective tax rate for the 2024 and 2023 second quarter was 18% and
20%, respectively.
Average earning assets for the 2024 second quarter increased $12
million, or 1%, from the year-ago quarter, primarily reflecting a
$57 million, or 9%, increase in average loans, a $38 million, or
10%, decrease in average securities, and a $7 million, or 22%,
decrease in interest-earning deposits in other banks, held mainly
at the Federal Reserve Bank.
Average commercial loan balances for the quarter, including
commercial real estate, increased $47 million, or 11%, from prior
year levels, as construction loans were drawn, and borrowers used
term loans to fund equipment and other purchases. Average
residential mortgage balances increased $8 million, or 5%, above
the prior year’s quarter as borrowers have been favoring
adjustable-rate mortgages during this period of higher interest
rates. The bank does not sell adjustable-rate mortgages to the
secondary market. Home equity lines of credit increased $2 million
from the prior year’s quarter as balances were drawn for expenses
and to maintain the low interest rate on the first mortgage.
Average consumer credit balances decreased $407 thousand, or 2%,
versus the same quarter of the prior year. Commercial loan demand
softened to somewhat muted levels during second quarter, with
households and businesses alike preferring to limit borrowing until
signs of reversal in the Fed’s elevated interest rate posture.
Nonperforming assets were $6.7 million, or 0.93%, of total loans
on June 30, 2024, compared to $255 thousand, or 0.04% of total
loans, a year ago. The identified commercial relationship mentioned
above accounts for $6.4 million of the $6.7 million total
nonperforming loans at June 30, 2024. Delinquent loan balances as
of June 30, 2024, increased to 1.16% of total loans as compared to
0.15% on June 30, 2023. Net loan charge-offs recognized during
second quarter 2024 were $246 thousand, or less than 1% of average
loans annualized, compared to second quarter 2023 net loan
recoveries of $10 thousand.
Average deposit balances increased on a quarter over prior year
quarter comparison by $2 million, or less than 1%. For the second
quarter 2024, the average cost of deposits amounted to 1.38%, as
compared to 0.84% for the second quarter 2023. Second quarter 2024
increases in average deposit balances over the prior year quarter
included money market accounts of $19 million and time deposits of
$76 million. Noninterest-bearing accounts decreased $48 million
from the prior year’s second quarter while savings and
interest-bearing demand accounts declined $45 million. The average
balance of securities sold under repurchase agreement during the
second quarter of 2024 decreased by $2 million, or 7%, compared to
the average for the same period in the prior year.
Shareholders’ equity totaled $110 million on June 30, 2024, with
2.7 million common shares outstanding. The average equity to assets
ratio amounted to 9.49% for the quarter ended June 30, 2024, and
8.68% for the quarter ended June 30, 2023. The Company declared a
second quarter dividend of $0.39 per share, producing an annualized
yield of 4% based on June 30, 2024 closing price of $39.00.
About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg,
Ohio, with approximate assets of $1.2 billion as of June 30, 2024.
CSB provides a complete range of banking and other financial
services to consumers and businesses through its wholly owned
subsidiary, The Commercial and Savings Bank, with sixteen banking
centers in Holmes, Wayne, Tuscarawas, and Stark counties and Trust
offices located in Millersburg, North Canton, and Wooster, Ohio. A
loan production office was opened in Medina, Ohio on March 20,
2024.
Forward-Looking Statement
This release contains forward-looking statements relating to
present or future trends or factors affecting the banking industry,
and specifically the financial condition and results of operations,
including without limitation, statements relating to the earnings
outlook of the Company, as well as its operations, markets, and
products. Actual results could differ materially from those
indicated. Among the important factors that could cause results to
differ materially are interest rate changes, softening in the
economy, which could materially impact credit quality trends and
the ability to generate loans, changes in the mix of the Company’s
business, competitive pressures, changes in accounting, tax or
regulatory practices or requirements and those risk factors
detailed in the Company’s periodic reports and registration
statements filed with the Securities and Exchange Commission. The
Company undertakes no obligation to release revisions to these
forward-looking statements or reflect events or circumstances after
the date of this release. See the non-GAAP disclosures at the end
of this release for a reconciliation of GAAP and non-GAAP
measures.
CSB BANCORP, INC.
CONSOLIDATED FINANCIAL
HIGHLIGHTS
(Unaudited)
Quarters
(Dollars in thousands, except per share
data)
2024
2024
2023
2023
2023
2024
2023
EARNINGS
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
2nd Qtr
6 months
6 months
Net interest income FTE (a)
$
8,959
$
9,190
$
9,377
$
8,871
$
9,027
$
18,149
$
18,026
Provision for credit loss expense
2,889
1,152
156
177
140
4,041
109
Other income
1,741
1,772
1,678
1,705
1,733
3,513
3,361
Other expenses
5,814
6,142
6,258
6,034
6,049
11,956
11,768
FTE adjustment(a)
34
42
32
34
33
76
67
Net income
1,615
2,933
3,697
3,481
3,644
4,548
7,578
Basic and Diluted earnings per share
0.61
1.10
1.38
1.30
1.36
1.71
2.82
PERFORMANCE RATIOS
Return on average assets (ROA),
annualized
0.56
%
1.02
%
1.25
%
1.19
%
1.27
%
0.79
%
1.33
%
Return on average common equity (ROE),
annualized
5.89
10.84
14.22
13.63
14.62
8.35
15.49
Net interest margin FTE(a)
3.28
3.37
3.36
3.21
3.33
3.33
3.35
Efficiency ratio
54.22
56.00
56.67
56.99
56.24
55.12
55.06
Number of full-time equivalent
employees
173
172
168
178
172
MARKET DATA
Book value per common share
$
41.43
$
41.11
$
40.43
$
37.96
$
37.36
Period-end common share market value
39.00
40.00
37.54
37.75
38.88
Market as a % of book
94.14
%
97.30
%
92.85
%
99.45
%
104.07
%
Price-to-earnings ratio
8.88
7.78
6.81
6.85
6.99
Average basic common shares
outstanding
2,664,485
2,665,277
2,671,086
2,675,967
2,680,526
2,664,879
2,686,382
Average diluted common shares
outstanding
2,664,485
2,665,277
2,671,086
2,675,967
2,680,526
2,664,879
2,686,382
Period end common shares outstanding
2,663,924
2,664,683
2,669,938
2,671,313
2,680,325
Common stock market capitalization
$
103,893
$
106,587
$
100,229
$
100,842
$
104,211
ASSET QUALITY
Gross charge-offs
$
274
$
88
$
15
$
43
$
15
$
362
$
54
Net (recoveries) charge-offs
246
74
(5
)
(119
)
(10
)
320
(6
)
Allowance for credit losses
10,587
7,136
6,607
6,691
6,559
Nonperforming assets (NPAs)
6,683
361
396
260
255
Net charge-off (recovery) / average loans
ratio
0.14
%
0.04
%
0.00
%
(0.07
)%
(0.01
)%
0.09
%
0.00
%
Allowance for credit losses / period-end
loans
1.47
1.00
0.94
0.98
0.99
NPAs/loans and other real estate
0.93
0.05
0.06
0.04
0.04
Allowance for credit losses /
nonperforming loans
158
1,979
1,667
2,576
2,577
CAPITAL & LIQUIDITY
Period-end tangible equity to
assets(b)
9.09
%
9.10
%
8.79
%
8.39
%
8.29
%
Average equity to assets
9.49
9.38
8.80
8.72
8.68
Average equity to loans
15.37
15.43
14.87
15.00
15.15
Average loans to deposits
70.54
69.78
67.47
66.20
65.05
AVERAGE BALANCES
Assets
$
1,161,533
$
1,160,661
$
1,172,324
$
1,162,029
$
1,151,403
$
1,161,106
$
1,149,240
Earning assets
1,097,706
1,097,704
1,107,002
1,096,679
1,085,751
1,097,705
1,084,381
Loans
717,105
705,294
693,779
675,283
660,004
711,199
648,760
Deposits
1,016,569
1,010,745
1,028,207
1,020,135
1,014,631
1,013,657
1,011,692
Shareholders' equity
110,219
108,837
103,164
101,294
99,958
109,528
98,646
ENDING BALANCES
Assets
$
1,167,315
$
1,156,245
$
1,178,689
$
1,156,598
$
1,156,157
Earning assets
1,104,404
1,097,703
1,109,171
1,087,591
1,088,561
Loans
721,916
710,822
701,404
680,949
664,605
Deposits
1,023,835
1,010,115
1,027,427
1,018,075
1,021,671
Shareholders' equity
110,368
109,555
107,939
101,410
100,140
Notes:
(a) - Net interest income on a
fully-taxable equivalent ("FTE") basis, restates interest on
tax-exempt securities and loans as if such interest were subject to
federal income tax at the statutory rate. Net interest income on an
FTE basis differs from net interest income under U.S. Generally
Accepted Accounting Principles, and is considered a non-GAAP
measure.
(b) - Tangible equity is a non-GAAP
measure, which is shareholders' equity net of goodwill.
CSB BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30,
June 30,
(Dollars in thousands, except per share
data)
2024
2023
ASSETS
Cash and cash equivalents
Cash and due from banks
$
19,873
$
21,897
Interest-bearing deposits with banks
36,332
38,329
Total cash and cash equivalents
56,205
60,226
Securities
Available-for-sale, at fair-value
127,279
145,357
Held-to-maturity
216,899
238,222
Equity securities
230
257
Restricted stock, at cost
1,520
1,607
Total securities
345,928
385,443
Loans held for sale
228
184
Loans
721,916
664,605
Less allowance for credit losses
10,587
6,559
Net loans
711,329
658,046
Premises and equipment, net
13,538
13,240
Goodwill
4,728
4,728
Bank owned life insurance
25,793
25,050
Accrued interest receivable and other
assets
9,566
9,240
TOTAL ASSETS
$
1,167,315
$
1,156,157
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Deposits:
Noninterest-bearing
$
277,749
$
315,200
Interest-bearing
746,086
706,471
Total deposits
1,023,835
1,021,671
Short-term borrowings
27,842
28,520
Other borrowings
1,326
1,862
Accrued interest payable and other
liabilities
3,944
3,964
TOTAL LIABILITIES
1,056,947
1,056,017
SHAREHOLDERS' EQUITY
Common stock, $6.25 par value. Authorized
9,000,000 shares;
issued 2,980,602 shares in 2024 and
2023
18,629
18,629
Additional paid-in capital
9,815
9,815
Retained earnings
99,766
92,149
Treasury stock at cost - 316,678 shares in
2024
and 300,277 shares in 2023
(7,757
)
(7,137
)
Accumulated other comprehensive loss
(10,085
)
(13,316
)
TOTAL SHAREHOLDERS' EQUITY
110,368
100,140
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
1,167,315
$
1,156,157
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF
INCOME
Quarters ended
Six months ended
(Unaudited)
June 30,
June 30,
(Dollars in thousands, except per share
data)
2024
2023
2024
2023
Interest and dividend income:
Loans, including fees
$
10,219
$
8,711
$
20,428
$
16,680
Taxable securities
1,817
1,945
3,707
3,957
Nontaxable securities
88
102
176
203
Other
379
444
748
989
Total interest and dividend income
12,503
11,202
25,059
21,829
Interest expense:
Deposits
3,489
2,128
6,789
3,712
Other
89
80
197
158
Total interest expense
3,578
2,208
6,986
3,870
Net interest income
8,925
8,994
18,073
17,959
Provision for credit loss expense
2,889
140
4,041
109
Net interest income, after provision
for credit loss expense
6,036
8,854
14,032
17,850
Noninterest income
Service charges on deposit accounts
291
300
571
592
Trust services
283
252
677
510
Debit card interchange fees
528
533
1,035
1,054
Credit card fees
165
192
322
369
Earnings on bank owned life insurance
194
172
382
341
Gain on sale of loans
73
56
109
59
Unrealized (loss) gain on equity
securities
(23
)
4
(29
)
13
Other
230
224
446
423
Total noninterest income
1,741
1,733
3,513
3,361
Noninterest expenses
Salaries and employee benefits
3,056
3,389
6,525
6,683
Occupancy expense
294
284
577
566
Equipment expense
201
189
425
396
Professional and director fees
437
386
769
707
Software expense
414
421
842
820
Marketing and public relations
142
136
270
259
Debit card expense
193
169
382
315
Financial institutions tax
216
192
432
384
FDIC insurance expense
129
178
264
249
Other expenses
732
705
1,470
1,389
Total noninterest expenses
5,814
6,049
11,956
11,768
Income before income taxes
1,963
4,538
5,589
9,443
Federal income tax provision
348
894
1,041
1,865
Net income
$
1,615
$
3,644
$
4,548
$
7,578
Net income per share:
Basic and diluted
$
0.61
$
1.36
$
1.71
$
2.82
CSB BANCORP, INC.
NON-GAAP DISCLOSURES
NET INTEREST INCOME, FULLY-TAXABLE
EQUIVALENT
Quarters ended
(Unaudited)
June 30,
(Dollars in thousands)
2024
2023
Net interest income
$
8,925
$
8,994
Taxable equivalent adjustment1
34
33
Net interest income, FTE
$
8,959
$
9,027
Net interest margin
3.27
%
3.32
%
Taxable equivalent adjustment1
0.01
0.01
Net interest margin, FTE
3.28
%
3.33
%
1 Net interest income on a fully-taxable
equivalent ("FTE") basis, restates interest on tax-exempt
securities and loans as if such interest were subject to federal
income tax at the statutory rate. Net interest income on an FTE
basis differs from net interest income under U.S. Generally
Accepted Accounting Principles, and is considered a non-GAAP
measure.
PRE-PROVISION NET REVENUE
Quarters ended
(Unaudited)
June 30,
(Dollars in thousands)
2024
2023
Pre-Provision Net Revenue
(PPNR)
Net interest income
$
8,925
$
8,994
Total noninterest income
1,741
1,733
Total revenue
10,666
10,727
Less: Noninterest expense as reported
5,814
6,049
Adjusted noninterest expense
5,814
6,049
PPNR
$
4,852
$
4,678
TANGIBLE EQUITY
(Unaudited)
June 30,
June 30,
(Dollars in thousands)
2024
2023
Total Shareholders' Equity
$
110,368
$
100,140
Less: Goodwill
4,728
4,728
Tangible Shareholders' Equity
$
105,640
$
95,412
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240726940783/en/
Paula J. Meiler, SVP & CFO 330.763.2873
paula.meiler@csb1.com